Canada: Chinese Investments Welcomed by Finance Minister

August 15, 2009

Canada's Finance Minister Flaherty

The Canadian Finance Minister Jim Flaherty who is currently visiting China together with Bank of Canada Gov. Mark Carney said last week that Canada welcomes Chinese direct investments in finance, mining, forestry, infrastructure, and manufacturing sectors throughout Canada.

Flaherty made these statements after meetings with ┬áChinese officials, including China’s Vice Premier Li Keqiang, Finance Minister Xie Xuren, People’s Bank of China Gov. Zhou Xiaochuan. Lou Jiwei, chairman of China Investment Corporation.

China Investment Corporation (CIC) is a sovereign wealth fund responsible for managing part of the People’s Republic of China’s foreign exchange reserves. CIC was established in 2007 with approximately US$ 200 billion of assets under management, making it one of the largest sovereign wealth funds. Since then, CIC’s assets have grown to US$ 298 billion by the end of 2008, according to and annual report from Aug. 7.

With strong support from the Chinese Government, CIC has access to strong financial resources and is committed to long-term investing and seeks to build up influence internationally by acquiring stakes in overseas companies. CIC has also bought a US$ 3 billion stake in the US private equity firm Blackstone in and a 9.9% stake of Morgan Stanley worth US$ 5 billion in 2007.

CIC stated early this year to have closed a deal of investing US$1.5 billion in Canadian mining company Teck Resources Ltd. (TCK) in exchange for 17% share, as a first move into the Canadian energy and resources sector.

Currently more than 65 Chinese companies are already listed in Toronto. Canada is a country rich in resources, while China is eager to build up a stronger position within commodities from iron ore to natural gas and energy.

The Canadian dollar is weakening against its U.S. counterpart, which is raising concerns that a stronger currency would stem the recovery in Canada, which lists as the 8th largest economy worldwide. The Canadian dollar has depreciated 2.6% since Flaherty said Aug. 4 that steps should be taken to damp movements and further depreciation in the dollar.

During his visit to China he again stated that he’s concerned about rapid fluctuations of the Canadian currency.

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